Matched Betting Exchanges

Online gambling has exploded since the advent of the internet and betting exchanges have been at the forefront of the online betting revolution.

The ability to bet on an exchange has opened up a new world of opportunities for the traditional sports bettor, none more so than matched betting, the easy way to make tax-free profits from betting.

What makes betting exchanges different to online sportsbooks is the ability for the man in the street to get involved in lay betting, the long-time preserve of traditional bookmakers. Betting exchanges are trading platforms that facilitate person to person betting. Members bet with each other and can open back or lay positions of their choosing, or simply accept bets offered by other members.

Betting exchanges take a commission, up to 5%, on transactions and this low cost entry has attracted better informed and more financially focussed bettors with the result that exchanges can offer near 100% books on many sporting events. What this means to the punter is fair odds and online bookmakers have been forced to offer better odds in their attempts to compete with betting exchanges.

There are other advantages too, in-play betting provides the option to lock in profits mid-play and fluctuating odds have attracted traders who use exchanges in the same way as binary financial markets.

Betting exchanges are the driving force behind matched betting. The ability to lay selections provides the opportunity to make a profit from betting promotions. Bettors can obtain free bets and bonuses for little or no cost by laying against a qualifying bet placed with the bookmaker. The subsequent bonus can be converted into cash profit using the same method of laying against the free bet selection.

The layout of bet exchanges may look confusing for people whose only experience of betting is with conventional bookmakers and sportsbooks. The columns of odds are offers from backers and layers waiting for their bets to be matched. The liquidity (total amount of money available to back or lay) is shown below the respective odds.

The best odds available to back and to lay are highlighted and members can chose to bet at those odds or post their own offer with the stake they are willing to back or lay which will be added to the queue.

Placing a bet on the exchange

Placing a back bet on an exchange is not difficult. Click on the best available odds in the Back section and simply enter the required stake. A dialogue will pop up asking to confirm the bet. Once confirmed, the bet will be matched as long as there is sufficient liquidity (the amount of money available to be matched at the selected odds). If not, the bet will be partially matched and the remaining stake will be offered in the lay section until someone comes along and accepts the bet.

Members can request any odds they choose by clicking the best available odds and changing the value to the odds required.

Lay betting explained

When lay betting it’s important to understand the liability which is how much it will cost if the lay selection wins. Unlike a traditional back bet which risks losing the stake placed with a bookmaker or exchange, lay betting can risk much more as the stake entered is the amount the layer is prepared to accept at the offered odds.

For example, placing an offer of £10 at odds of 6.0 (5/1) carries a liability of £50. This is how much the backer could win for matching the lay bet while the layer stands to win the £10 back stake.

To place a lay bet, select the lowest odds in the Lay section, enter the stake and the dialogue will show the liability. Once confirmed, the bet will be matched. As with back bets, any unmatched part of the lay bet will be queued until someone accepts the bet.

To offer lower odds, edit the odds when the dialogue box opens. The liability of the lay bet must be ring fenced from the member’s account balance to ensure the backer receives payment if the selection wins. Once a lay bet is matched, the liability is deducted from the balance until the market settles.

If the lay bet is successful, the ring fenced funds are returned along with the backers stake, less commission from the winnings. If the selection wins, the lay liability minus commission is transferred to the backer’s account.

UK Betting Exchanges

Betfair became the pre-eminent UK betting exchange after merging with Flutter.com in 2000. Liquidity is the vital factor for a successful trading platform and the merger has ensured Betfair remains a favourite for matched betting welcome bonuses and free bet offers like acca insurance. The company strengthened its place in the online gambling market when merging with Paddy Power in 2016.

Betdaq was founded in 2000 and is the second largest betting exchange in the UK. It was acquired by Ladbrokes in 2013 and continues to trade with Betdaq branding. Meanwhile, Ladbrokes provide access to the exchange from its website and although it is branded as Ladbrokes Exchange, it is in fact one and the same platform as Betdaq.

Matchbook was formed in 2004 without making much impact until 2011 when acquired by a group of investors. The betting exchange provides a different commission structure with a very low rate of 1.7% (or 0.85% for Posted Offers). However, commission is charged on all bets, not just winning bets as with other exchanges. It has built a good reputation for high liquidity football markets and more recently added horse racing to its range of sports markets.

Smarkets is the latest UK betting exchange, launched in 2008. It has received plaudits for its ease of use and while providing a limited range of sports betting markets, it is gaining in popularity due to good liquidity and low commission rate of 2%.

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